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BHP/Anglo may quit SA ferrochrome
Market rumours are rife that both Anglo and BHP Billiton are considering quitting their SA ferrochrome businesses. BHP Billiton would not comment on the speculation but did say that Samancor's ferrochrome production was cut from 850 000 tons a year to 800 000 tons this year. BHP Billiton owns 60% of Samancor with Anglo holding the balance. Ferrochrome prices are at a 25 year low with Hernic and Xstrata also reducing output in an effort to balance supply and demand. BHP Billiton said that ferrochrome is not making acceptable returns at current levels and that the government's policy of "use it or loose it" was likely to make matters worse. The policy relates to new minerals legislation designed to encourage companies to use the existing mining rights they hold or risk having them taken away. SA Chrome is set to open its R700m ferrochrome facility in Mar 02 which at full production will release 250 000 tons a year.
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BHP Billiton to invest in Mexican transport system
BHP Billiton will acquire equity ownership of two Mexican companies involved in the transportation of hydrocarbons from the group's Mad Dog oil and gas development and its Atlantis discovery, both in the Gulf of Mexico. The pipelines are part of a new system being built in the southern Green Canyon area that will also transport hydrocarbons from the BP-operated Holstein development. The group will acquire a 25% interest in the Caesar oil pipeline and a 22% interest in the Cleopatra gas pipeline with capital costs estimated at around USD100m (BHP Billiton's share).
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BHP will close its Tower Colliery
BHP announced that it will close its Tower Colliery in New South Wales by Dec 02. High costs, limited coal recovery capacity and significant geological problems are the cause of the closure which will result in 60 job losses by Apr 02. Tower Colliery currently produces about 1.4m tons of metallurgical coal per annum.
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BHP Billiton is awarded refund of USD85m
BHP Billiton was awarded an appeal regarding the deductibility of financing costs paid to the General Electric Company following the purchase of the Utah Group in the early 1980's. The High Court of Australia ruled in BHP Billiton’s favour, ordering the refund of USD85m together with associated interest that had been paid to the Australian Tax Office in Oct 00.
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BHP Billiton to go ahead with Mad Dog development
BHP Billiton is to go ahead with the development of its Mad Dog oil and gas discovery in the ultra deepwater Green Canyon area of the Gulf of Mexico. The field contains estimated reserves in the range of 200-450m barrels of oil equivalent gross. Capital expenditure of up to USD335m has been approved with final expenditure dependent on the number of development wells required. The gross design of the facility will be 80 000 barrels of oil per day and 40m standard cubic feet of gas per day with first production expected by the end of 2004. The field has an estimated life of 20 years.
The group said that sanctioning of the Atlantis development should be announced later in 2002 which will become the second ultra-deepwater producing asset in the Gulf. BHP Billiton has ownership interests in more than 220 leases in the Gulf of Mexico.
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BHP Billiton smelter expansion
BHP Billiton is to go ahead with a 132 000 tonnes per annum expansion project at its Hillside aluminium plant. Construction costs are estimated at USD449m or USD3 403 per tonne of new capacity with commissioning due in Apr 04. Construction synergies between the Hillside project and the Mozal expansion will be maximised and financed via external debt. In addition, a new electricity tariff has been agreed with Eskom -- a 25 year contract has been signed, with a formula for tariff increases. The expansion will consolidate Hillside as one of the world's lowest cost aluminium producers and should generate above average financial rewards.
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BHP completes withdrawal from Ok Tedi Copper Mine
BHP Billiton completed its withdrawal from the Ok Tedi Copper Mine in Papua New Guinea with the transfer of its 52% equity stake to the PNG Sustainable Development Program Ltd in Feb 02. This fund will operate for the benefit of the people of the area, independently, utilising future dividend payments arising from BHP Billiton's transferred shareholding in the mine to fund current and long-term sustainable development projects. BHP Billiton previously reported a write-off of US$148m, being its share of the net assets of the mine. The long and drawn out exit from this project is designed to protect shareholders from liabilities arising from the operation of the mine subsequent to BHP Billiton's exit.
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Barclays sell off part of holding in BHP Billiton
Barclays plc has through its subsidiary, Barclays Bank plc, disposed of 14 096 528 ords on the 4 Feb 02. This leaves a total holding of 56 235 430 which is a total percentage holding of issued class of 2.42%.
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Notification of major interests BHP Billiton
The Capital Group companies have disposed of a total of 2 123 422 ords (a total of 0.09% of issued class) on the 28 Jan 02. This leaves a total holding of 90 814 438 which is a total percentage holding of issued class of 3.92%.
Barclays plc has through its subsidiary, Barclays Bank plc, acquired a total of 26 892 178 ords (a total of 1.16% of issued class) on the 30 Jan 02. This is a total holding of 70 331 958 which is a total percentage holding of issued class of 3.03%.
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BHP Billiton to cut jobs
BHP Billiton will cut 1 000 jobs across the globe by the end of 2002 in an effort to cut costs by $270m. The cuts will mainly be at office level from resignations, retirements and limited retrenchments as duplicate activities are eliminated. It is expected that 300 of the redundancies will affect contractors. Locally, only one or two people will be affected. By the end of 02, 18 of the group's 32 offices will be closed with analysts predicting that the majority of job cuts will be at Australian offices.
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BHP Billiton consortium acquire Colombian Energy
A consortium comprising subsidiaries of BHP Billiton, Anglo American and Glencore International has acquired International Colombia Resources Corporation (Intercor) from Exxon Mobil Corporation for an undisclosed amount. Intercor owns 50% of a mining operation in Colombia -- Cerrejon Zona Norte (CZN) as well as rail and port infrastructure in the region. Following completion of the transaction, Intercor will own 100% of the CZN and have a net asset value of US$366m. CZN produces around 19m tons of high quality energy coal per annum for export to international markets. The mine has a reserve life of more than 30 years at current market rates.
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